"The cause of the incident is still being investigated but the EPA is obviously very concerned about any impacts on the Wollangambe River, which runs into the Greater Blue Mountains World Heritage Area approximately two kilometres downstream of the mine," EPA South director Gary Whytcross said. "This is a very sensitive environment."

Black sludge from the Clarence coal mine during a pollution incident in December 2014. Photo: Supplied

"This is the worst possible way you can pollute the river," Keith Muir, director of the Colong Foundation for Wilderness, said. "This will make the wild river run black."

Greens mining spokesman Jeremy Buckingham said the coal industry was treating the environment "as their tip" and saw any fines it had to pay "as no more than the cost of doing business".

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"The Clarence Colliery is a chronic environmental offender and, if there has been another toxic spill from this coal mine threatening the World Heritage-listed Wollangambe River, then the EPA needs to get serious by taking them to court where a significant fine can be imposed," Mr Buckingham said.

"This latest incident once again backs up the Greens' calls for coal mining to be banned in our water catchment areas."

Mr Muir of the Colong Foundation said the spill came at a bad time for Centennial.

"The disaster comes at a time when the EPA was negotiating a major pollution control improvement program to remove 25 megalitres a day of toxic mine effluent that has discharged into this river, and restore it to a pristine state," he said. "It was a program that conservationists had been working for years to achieve."